Alcoa to Curtail Smelting Capacity in Brazil as Reshaping of Upstream Portfolio Continues
March 30 2015 - 8:00AM
Business Wire
Lightweight metals leader Alcoa (NYSE: AA) today announced that
it will curtail the remaining 74,000 metric tons of smelting
capacity at its São Luís (Alumar) facility in Brazil. The decision
is aligned with the Company’s recent announcement to evaluate
upstream capacity for possible curtailment, closure or sale as
Alcoa further optimizes its commodity portfolio. The curtailment is
expected to be complete by April 15, 2015.
“We continue to take decisive steps to create a globally
competitive commodity business and are executing against our
upstream capacity review,” said Bob Wilt, President of Alcoa’s
Global Primary Products. “These are difficult but necessary actions
in support of Alcoa’s strategy to lower the cost base of our
upstream businesses.”
This curtailment adds to the 85,000 metric tons of capacity
idled at São Luís in May 2014 and the 12,000 metric tons curtailed
in October 2014. Challenging global market conditions in primary
aluminum production and increased costs have made the smelter
uncompetitive. The refinery at São Luís is unaffected and will
continue normal operations.
“We understand how deeply this decision affects our employees,
our contractors and our communities,” said José A. Drummond,
President of Alcoa Latin America. “Our teams have worked extremely
hard to make the plant competitive, and we will actively consult
with our employees, unions and community stakeholders to minimize
the impact of this action. We will continue working to achieve the
competitive conditions necessary for aluminum production in the
region.”
The curtailment is in line with Alcoa’s announcement on March 6,
2015 to evaluate 500,000 metric tons of smelting capacity and 2.8
million metric tons of refining capacity for possible curtailment,
closure or sale. Once the São Luís facility is curtailed, Alcoa
will have approximately 740,000 metric tons, or 21 percent, of its
smelting capacity offline.
As a result of today’s announcement, Alcoa will record a
restructuring-related charge in the first quarter expected to be
between $10 million and $15 million after-tax, or $0.01 per
share.
By curtailing high-cost smelting and refining capacity, Alcoa
supports its goal of lowering its position on the global aluminum
cost curve to the 38th percentile and the global alumina cost curve
to the 21st percentile, by 2016.
About Alcoa
A global leader in lightweight metals technology, engineering
and manufacturing, Alcoa innovates multi-material solutions that
advance our world. Our technologies enhance transportation, from
automotive and commercial transport to air and space travel, and
improve industrial and consumer electronics products. We enable
smart buildings, sustainable food and beverage packaging,
high-performance defense vehicles across air, land and sea, deeper
oil and gas drilling and more efficient power generation. We
pioneered the aluminum industry over 125 years ago, and today, our
approximately 59,000 people in 30 countries deliver value-add
products made of titanium, nickel and aluminum, and produce
best-in-class bauxite, alumina and primary aluminum products. For
more information, visit www.alcoa.com, follow @Alcoa on Twitter at
www.twitter.com/Alcoa and follow us on Facebook at
www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events
and expectations and as such constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include those containing such
words as “estimates,” “expects,” “goal,” “plans,” “will,” or other
words of similar meaning. All statements that reflect Alcoa’s
expectations, assumptions or projections about the future other
than statements of historical fact are forward-looking statements,
including, without limitation, statements about Alcoa’s goal to
create a globally competitive commodity business, the expected
timing for completing the curtailment of the smelting capacity at
its São Luís facility, and other statements about Alcoa’s
strategies, outlook, and business and financial prospects.
Forward-looking statements are subject to a number of risks,
uncertainties, and other factors and are not guarantees of future
performance. Important factors that could cause actual results to
differ materially from those expressed or implied in the
forward-looking statements include: (a) material adverse changes in
aluminum industry conditions, including global supply and demand
conditions and fluctuations in London Metal Exchange-based prices
and premiums, as applicable, for primary aluminum, alumina, and
other products, and fluctuations in indexed-based and spot prices
for alumina; (b) deterioration in global economic and financial
market conditions generally, or unfavorable changes in the markets
served by Alcoa; (c) Alcoa’s inability to successfully realize
goals established in each of its four business segments, at the
levels or by the dates targeted for such goals (including moving
its alumina refining and aluminum smelting businesses down on the
industry cost curves and increasing revenues and improving margins
in its Global Rolled Products and Engineered Products and Solutions
segments); (d) changes in preliminary accounting estimates due to
the significant judgments and assumptions required; and (e) the
other risk factors discussed in Alcoa’s Form 10-K for the year
ended December 31, 2014, and other reports filed with the
Securities and Exchange Commission. Alcoa disclaims any obligation
to update publicly any forward-looking statements, whether in
response to new information, future events or otherwise, except as
required by applicable law.
AlcoaInvestor ContactNahla Azmy,
+1-212-836-2674Nahla.Azmy@alcoa.comorMedia ContactMonica Orbe,
+1-864-836-2632Monica.Orbe@alcoa.comorBrazil:Eliane Uchoa, +55 11
3296-3058Eliane.Uchoa@alcoa.com.br
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